choice

October 01, 2007

I've always believed that choice drives change. Or more specifically, that choices provided by free markets drive change in institutions towards more democratic systems. Perhaps it is because of the system I grew up in, but even Chinese Market-Leninism (as opposed to Marxist-Leninism), the odds of a third way are small. Maybe one day I will unlearn this.

Take for example, what is happening in the enterprise when confronted with the abundance of choice afforded by the freer market of networked consumer and open source. This isn't just the fact that employees can choose their own IT solutions, putting policy aside, because of open source if you have the technical wherewithal, or hosted offerings if you've focused on other things. These are the things most CIOs are aware of, but they aren't worrying about their jobs. They are worried about the implicative decision about whether to be a host or not. If it is a public facing Web 2.0 community, they can be a host to it and exhibit influence. If it is intranet collaboration they can be a host to it and even have control, with a healthy check and balance against it.

But it is the second order effects of choice in the consumer market that create significant arbitrage conditions for enterprises. New models arise, with foreign concepts like share control to create value. It isn't the fact that you can host or not, but what can happen if you don't host it. In a very clear example, Radiohead is not only solely distributing their new album over the net, but enabling consumers to choose their own price.

Choose your own price.

If you work in any intellectual property driven industry, you better think about that for a moment. It may reflect the actual demand model you are about to deal with. As the Net Gens become the dominant demographic in the market, they are more influenced by their peers than institutions, and know if they can't get what they want from institutions they will do it themselves.

In software, we are close to this model, at least in making the choice binary. At Socialtext, you choose if you want to pay, or do it yourself with open source.

Letting businesses choose their own price is a far way away, although I believe inevitable, as we transition to a gift economy, because of the institutionalized irrational selfishness of the corporate individual (feel free to disregard this sentence). But it is very real for consumer markets. Information not only wants to be free, so to does the decisions it informs, which is how information creates value.

Decisions want to be free.

We know this as a democratic ideal. We don't understand how it fits in business, and chalk its failures up to externalities. Especially when framed when having the right decision is informed by proprietary information. Unfortunately that is our default view. But often our best decisions can be made with shared information, such as benchmarks to play it safe. Mostly we confuse participating in decisions, as opposed to how decisions are made. The difference is the right to vote and voting rules. It may be, and in many cases in the form of an institution, better for decisions to be made as a process where all inputs are not equal. Decisions want to have participation, and result in better outcomes if they have it. But we are still working out how to tap mass collaboration, the increasingly decentralized decision making models that are the future of work, let alone how decisions are delivered, at reasonable cost.

With such abundance, does it not break our conventions of choice as scarcity? Of decisions as scarcity?

The one area I subscribe to in scarcity is attention, the choice of time. When you speak to CIOs of major corporations and how they exact change, it is how they spend it. There is a second order effect here too. How someone delegates attention, when the choice of attention is actually abundant. When an employee can choose the Facebook social news feed when otherwise carrying out their duties to requisite feeds. This is fairly well known when delegating attention to information, but not on choice, or collaborative choice, when choice if not power to realize it is abundant.

I often think of institutions as making the transition from Marxist Leninism to Market Leninism, although they at least believe in internal markets to drive down transaction costs, and external markets as the reality that keeps them in check. But that control instinct is deeply rooted, perhaps all the way to the psychological insecurities we all have as individuals. It is hard to trust that more democratic decision making processes can result in better outcomes. It is equally hard to achieve them at reasonable cost (ask anyone at my company how we got to institutionalizing our great "be an adult" vacation policy).

But I haven't yet muttered innovation. When I often say that shared control creates value, that is the value I speak, even when you only know it when you see it. There are common practices yet to be defined on how to share that control, for decisions, so you can barely call them common.

In choice, we find competition, both as consumers and producers. It isn't just that this is a motivator. It is our check and balance, that inevitably results in change.